Is Canva Over Valued?

Canva has been in the headlines lately for its impressive IPO filing. Valued at over $6 billion, the Australian-based graphic design platform has become one of the most valuable companies in the world. But is Canva actually worth that much?

Canva is certainly a popular platform, and its user base is growing rapidly. According to its IPO filing, Canva has over 30 million monthly active users, with over 3 billion designs created in 2020.

The company also reported $539 million in revenue for 2020 and an operating profit of $11 million. This is an impressive track record that suggests Canva could be a successful business.

However, there are some risks associated with investing in Canva. For one thing, it’s heavily reliant on advertising revenue, which could be volatile if a downturn hits the economy or if competitors enter the market and offer better deals to advertisers. Additionally, Canva’s user growth could slow if it fails to add new features or innovate quickly enough.

Furthermore, Canva’s valuation of $6 billion seems high given that it’s only been around since 2013 and its current revenue is only a fraction of larger companies such as Adobe ($13 billion) and Microsoft ($125 billion). In other words, investors may be paying too much for what Canva currently offers.

Conclusion:

It appears that Canva may be slightly overvalued at this point in time given its current user base and revenue figures. However, if it can continue to innovate quickly and attract more users, then it could easily justify its current valuation in the future.